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Rolls-Royce To Gain Exclusivity On A330neo

As the AirbusA350 progresses through its test program toward first delivery, Airbus is facing a crucial decision about the aircraft it is ultimately designed to succeed: Will the A330 get a new engine and, if so, which one?

The answer to the first question is almost certainly “yes.” Without a new engine, the most successful Airbus widebody to date likely would face a serious production decline, perhaps as soon as year-end. But Airbus is also close to an agreement with one of the three engine makers to provide a powerplant that could extend the life of the program by several years.

While talks have been underway for some time with the three big engine companies—General Electric, Pratt & Whitney and Rolls-Royce—Airbus is in final negotiations with Rolls-Royce to become sole-source supplier for a reengined version of the A330. The formal launch of that aircraft, dubbed the A330neo, is to be announced later this summer.

According to sources close to the discussions, a preliminary agreement has been reached, and the deal is expected to be finalized by the end of May. Rolls-Royce, which declines to comment, clinched the work after bidding aggressively against General Electric’s proposed derivative of the Boeing 787 engine, the GEnx-1A. Pratt & Whitney also has been discussing a proposal with Airbus, but given the amount of development work needed, it was unlikely from the beginning that Pratt would be a front-runner.

Both Rolls-Royce and General Electric have insisted on being the exclusive engine provider for the A330neo. While a new engine would extend the program life by years, the number of aircraft produced likely will be much smaller than in a new program, thus limiting the number of engines for which a return on investment must be reached.

Airbus has been under increasing pressure from major customers such as Delta Air Lines and CIT Aerospace to offer a new engine on the A330. The manufacturer initially responded slowly to these demands, indicating that a decision will not be made before 2015, when it will deliver to Delta the first new, 242-ton high-gross-takeoff-weight A330-300 variants. But due to the market feedback, the schedule is now a lot more compressed, and Airbus wants to make a decision much sooner, officially before year-end. Industry sources say a formal launch announcement is likely at or even before the Farnborough International Airshow in mid-July.

Airbus has a backlog of 260 A330s, but that is likely going to dwindle quickly unless there are more major orders, given the current production rate of 10 aircraft per month. The backlog “gives us good protection for 2014 and 2015,” says Airbus Chief Financial Officer Harald Wilhelm. “But we have quite a lot of slots available in 2016 and we are working hard to fill them.” If the A330neo is launched, it probably will be ready for entry into service only by 2017 or later.

With demand slowing noticeably already, Airbus is facing a tougher time to secure 2016 production slots, but the going will get even harder later if there is no A330neo. The program benefitted for years from delays of the 787, but now that the Boeing program is recovering, the sales picture is changing.

Referring to the A330neo decision, Wilhelm says: “We are working on the file.” Customers have been “encouraging,” according to Wilhelm, but he notes that “we need to do our homework, and we will make a decision one way or another during the course of 2014.” He adds that “if we were to do it, it would give the A330 an excellent perspective in terms of continued life—that is why we are looking at it.” Production rates toward the end of the decade would “be a function of whether we are doing the reengining or not,” Wilhelm says.

That decision will also likely influence the future of the A350 family. Airbus has been pushing to convert orders for the smallest version, the A350-800, to larger ones. However, 34 orders are remaining and the manufacturer is, in theory, bound to deliver the first aircraft in 2016. With the state of specific development work, that will probably not be achievable. If the A330neo is launched, Airbus could offer it to A350-800 customers that are unwilling to trade up. The two aircraft are similar in passenger capacity, but the A330neo has a shorter range. Airbus has been indicating that it would still like to build an A350-800, but much later—toward the end of the decade—and as a small stretch of the current design.

The A330neo also would be pitched to existing A330 customers as a replacement for some earlier versions and as a tactical means to counter the 787. A total of 1,069 A330s are in operation.

The engine deal, if sanctioned, is additionally significant for Rolls, since the winner of the A330neo contest also will take the pole position in any potential contest to reengine the A380, something called for by Emirates Airline, the world’s largest A380 operator. The engine selected by Airbus is believed to be a derivative of the 78,000-lb.-thrust Trent 1000-TEN (Thrust Efficiency New technology) now in development for the 787 but adapted to provide bleed air for the A330’s pneumatic systems.

Launched at the 2012 Farnborough air show, the Trent 1000-TEN is being developed for all 787 versions, including the -10, which received the go-ahead last year. The 787 engine will be built in Singapore and is due to enter service on the 787-8/9 in 2016. Service entry on the stretched 787-10 is scheduled to follow in 2018. Testing of the first -TEN began in March at Rolls’s site in Derby, England. Eight engines are scheduled to take part in the certification program, which includes a stint on Rolls’s Boeing 747-200 flying testbed in mid-2015. Certification is expected at the end of next year.

Designed originally to meet the power needs of the more-electric 787, the Trent 1000 is the first Rolls turbofan not to incorporate the standard bleed system to supply pressurized air for airframe ventilation. It does, however, supply compressor air to the nacelle to prevent ice build-up. For the A330neo, propulsion sources say the process of converting the engine for conventional bleed will be relatively straightforward. Modifications are expected to be modeled on the system used in the Trent 900 engine for the A380, which takes bleed air for environmental control and wing anti-icing from offtake ports in both the intermediate- and high-pressure spools, depending on demand level and flight phase.

Agreement about Rolls’s participation in the A330neo project appears to have coincided closely with the visit to London on May 7 of Airbus Group CEO Tom Enders. Although it is unknown if his visit to the U.K., during which he delivered the Royal Aeronautical Society’s 50th Sir Henry Royce Lecture, is in anyway linked to an engine deal for the new Airbus project, Enders’s comments hinted at the growing links between Airbus and Rolls over the widebody programs. These have grown in recent times as Rolls has become the sole-source provider of the Trent XWB for the A350 and cornered the lion’s share of the current A330 market with the Trent 700.

“We can’t become risk-averse; we need to manage risks, but take them,” Enders says. “And we need to do it together, in perfect step with the incremental improvements, doing each when it adds most value for customers and for the investors.”

General Electric says that even if the Rolls deal on the A330 is confirmed, it does not represent a deeper problem in its relationship with Airbus. GE Aviation President and CEO David Joyce suggested to Aviation Week in March that the U.S. engine maker’s existing workload, added to what it judges to be a relatively small market for the A330neo, make it difficult to justify a new development for Airbus. GE has a firm order backlog of more than 2,300 widebody engines—more than 1,000 of which are for GEnx-1B/2Bs for Boeing 787/747-8s, respectively.

In addition, it is deep into development of the all-new GE9X for the Boeing 777X, for which there are more than 600 firm orders already, as well as the Passport business jet engine. At the same time, GE is ramping up GE90 production to fulfill about 700 firm orders and supporting the test, development and production rate build-up of the Leap-1 engine family as part of its CFM joint venture with Snecma.

“The question is: Is the market big enough? Does the climate make sense? Do we want to do it?” Joyce says. “We spend a lot of money doing a new engine—I mean a lot of money—and the market has to be big enough to offset that cost,” he adds. “You can’t pass that price on to the customer, so a whole new engine is a tough call, to be honest, on an A380 and an A330neo.”

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